Background: In animal cells, recruitment of phosphatidylinositol 3-kinase by growth factor receptors generates 3-phosphoinositides, which stimulate 3-phosphoinositide-dependent protein kinase-1 (PDK1). Activated PDK1 then phosphorylates and activates downstream protein kinases, including protein kinase B (PKB)/c-Akt, p70 S6 kinase, PKC isoforms, and serum- and glucocorticoid-inducible kinase (SGK), thereby eliciting physiological responses. Results: We found that two previously uncharacterised genes of Saccharomyces cerevisiae, which we term PKH1 and PKH2, encode protein kinases with catalytic domains closely resembling those of human and Drosophila PDK1. Both Pkh1 and Pkh2 were essential for cell viability. Expression of human PDK1 in otherwise inviable pkh1Δ pkh2Δ cells permitted growth. In addition, the yeast YPK1 and YKR2 genes were found to encode protein kinases each with a catalytic domain closely resembling that of SGK; both Ypk1 and Ykr2 were also essential for viability. Otherwise inviable ypk1Δ ykr2Δ cells were fully rescued by expression of rat SGK, but not mouse PKB or rat p70 S6 kinase. Purified Pkh1 activated mammalian SGK and PKBα in vitro by phosphorylating the same residue as PDK1. Pkh1 activated purified Ypk1 by phosphorylating the equivalent residue (Thr504) and was required for maximal Ypk1 phosphorylation in vivo. Unlike PKB, activation of Ypk1 and SGK by Pkh1 did not require phosphatidylinositol 3,4,5-trisphosphate, consistent with the absence of pleckstrin homology domains in these proteins. The phosphorylation consensus sequence for Ypk1 was similar to that for PKBα and SGK. Conclusions: Pkh1 and Pkh2 function similarly to PDK1, and Ypk1 and Ykr2 to SGK. As in animal cells, these two groups of yeast kinases constitute two tiers of a signalling cascade required for yeast cell growth.